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Stocks mixed as earnings season rolls on

Stocks ended Monday’s session mixed as investors awaited quarterly results from an onslaught of major corporations across sectors, with consensus estimates pointing to a broad-based decline in earnings over last year.

U.S. equity markets opened Monday on the heels of a holiday weekend, with regular trading closed Friday in observance of Good Friday. Markets in Europe also remained closed for Easter Monday.

Investors are eying a host of major companies posting quarterly results this week, with 155 names in the S&P 500 set to report.

S&P 500 company earnings are expected to decline by 4.1% year-over-year in the first quarter of 2019, according to Wall Street consensus. The negative earnings estimates are due in large part to the timing that the Trump administration’s corporate tax cut took effect, which had helped to magnify earnings at the start of 2018 and toughen comparisons this year.

As of Monday, about 21% of the S&P 500’s market capitalization had reported first-quarter results. Earnings were beating by 6.0%, with 77% of companies surpassing their bottom-line estimates. This compares to 5.4% and 71% in the last 3 years, according to an analysis by Jonathan Golub, U.S. chief equity strategist for Credit Suisse.

Companies in the Industrial sector have performed well this earnings season, with quarterly results topping EPS estimates by 5% and 81% of companies exceeding projections, Golub added. This comes on the heels of a rebound in manufacturing activity in the U.S. at the end of the first quarter, with the Institute of Supply Management’s most
recent reading
on the manufacturing sector in March exceeding expectations.

Other analysts have been similarly optimistic on the sector in light of recent data.

“The recent rebound in activity surveys and some of the hard data in Asia signals that global manufacturing activity may be bottoming out, suggesting there may not be much more downside for the U.S. factory sector in the months ahead,” Paul Ashworth, chief U.S. economist for Capital Economics, wrote in a note Monday.

Trader Andrew Silverman works on the floor of the New York Stock Exchange, Tuesday, March 12, 2019. Another slide in Boeing weighed on the Dow Jones Industrial Average. (AP Photo/Richard Drew)

Elsewhere, crude oil prices jumped following reports from
The Washington Post
and
Reuters
that the U.S. State Department is poised to announce an end to sanction waivers for countries currently importing Iranian crude. The news sent Brent crude oil prices (
BZ=F
) and West Texas Intermediate crude oil prices (
CL=F
) to year-to-date highs.

Brent crude oil prices rose as much as 3.54% during intraday trading, while West Texas Intermediate settled higher by 2.7% to $65.70 per barrel, the highest closing level since Oct. 31.

STOCKS

Halliburton (
HAL
) reported better-than-expected earnings and revenue
for the fiscal first quarter and anticipated an improvement in oilfield service pricing in the coming months. The world’s largest fracking provider posted revenue of $5.73 billion, versus $5.53 billion expected, and adjusted EPS of 23 cents, or a penny ahead of expectations. CEO Jeff Miller said in a statement that he believes that “the worst in the pricing deterioration” were behind them in the company’s North American segment – which provides about two-thirds of total revenue – and anticipated demand in services “progressing modestly” in the next couple quarters.

Kimberly-Clark (
KMB
), the maker of household products including Kleenex
-brand tissues, posted top- and bottom-line results for the first quarter that exceeded consensus expectations and reiterated its full-year earnings guidance. The company posted first-quarter adjusted earnings per share of $1.66, versus $1.54 expected, on net sales of $4.6 billion, versus $4.53 expected. Kimberly-Clark reiterated its full-year earnings outlook for adjusted EPS of between $6.50 and $6.70 per share.

Grainger (
GWW
) beat consensus expectations on the bottom-line
and reiterated its full-year 2019 guidance for sales growth of between 4% and 8.5%. First-quarter adjusted EPS of $4.51 was 6 cents ahead of estimates, while sales of $2.8 billion were in-line with consensus expectations. The industrial supplier also posted operating margin of 13% for the reported quarter and reiterated its full-year guidance for operating margin to come in between 12.2% and 13%.

ECONOMY

Existing home sales declined more-than-expected in March to a seasonally adjusted rate of 5.21 million, according to the
National Association of Realtors (NAR).
Consensus expectations were for a seasonally adjusted pace of 5.3 million for the month. The headline reading was down 4.9% from February’s downwardly revised pace of 5.48 million, which had in turn been a more than 11% surge from the month prior.

“It is not surprising to see a retreat after a powerful surge in sales in the prior month,” Lawrence Yun, NAR chief economist, said in a statement. “Still, current sales activity is underperforming in relation to the strength in the jobs markets. The impact of lower mortgage rates has not yet been fully realized.”